After a bumper year for UK green policy updates, what gaps remain on the road to net-zero?
Although the UK Government has published a swathe of environmental policy updates around COP26 this year, there are still "mixed signals" as the argument that sustainability and profitability are at odds rages on.
That is according to a panel of experts in the energy transition, who spoke at edie’s SPARK! Net-Zero Action Workshops in Birmingham this Tuesday (30 November) - an event hosted to convene energy and carbon leaders in collaborating and co-creating solutions to the most pressing decarbonisation challenges.
The panel was asked what was top of their remaining UK policy wishlist after COP26- and the flurry of Strategy publications and funding announcements that came in the weeks and months leading up to the climate summit. These included the Hydrogen Strategy, Heat and Buildings Strategy and overarching Net-Zero Strategy.
One Home’s chief executive Angela Terry called for an overarching carbon tax, stating that “the carrots and the sticks are not clear for businesses or for the general public”.
She said: “At the moment, we have a situation where air passenger duty was halved [for domestic flights] in the last Budget. We are not having a situation where market signals are appropriate for the cost of the damage caused by burning fossil fuels, so we are left with cash-strapped local authorities picking up the fallout of the physical impacts of the climate crisis.
“We’ve had, since the pandemic, such a deficit in the Budgets across a whole government. Having a carbon tax that is accurate and fair, across all sectors – because when you look across all sectors, there are some unexpectedly stubborn ones – is so important.”
Turner & Townsend’s principal consultant for sustainability Maria Spyrou agreed, stating that a carbon tax would “nudge” businesses and individuals.
An audience member asked how individual businesses could be brought around to the idea of higher taxes, floating the possibility of the Government providing more information on how funding is spent, and formally allocating a portion of GDP to its environmental targets. The Climate Change Committee (CCC) estimates that the net-zero target’s delivery will cost 0.5% - 1% of GDP.
“Until there’s a ring-fenced, big chunk of money that matches the scale of the challenge… we are always going to be getting scraps off the table,” Terry said, contrasting the £27bn roads building scheme with the recent funding announcement of just £20m per year for tidal energy.
She added: “I work a lot with papers and they are always outraged when there is a high cost on something. I tell them they are not comparing it with the cost of inaction, so there is no balanced argument.”
The REA’s head of power and flexibility Mark Sommerfeld added: “Of course, it is slightly different for an energy-intensive industrial sector, but the purpose of a carbon tax is to create a level playing field. Low-carbon technologies need to be able to compete with overly-subsidised fossil fuel technologies, in upfront price and price of operations.”
Flexibility, planning and finance
Aside from clearer tax regimes and greater levels of funding from Westminster’s coffers, the panellists raised several other remaining policy gaps.
Spyrou continued: “I’d love to see would be a clear definition of net-zero. People throw the term around but don’t know what it means. There should be clarity for businesses and for the public.
“Buildings are my speciality and the Government has not said, exactly, what a net-zero building is. If a building will be net-zero by 2030, what does that mean in the interim?”
The REA’s Somerfield agreed with Spyrou and also argued that the Government’s longer-term ambitions on low-carbon heating and flexible, clean energy systems are not matched with adequate plans in the meantime. This could jeopardise progress altogether, he said, as “sophisticated and joined-up development” is needed to deliver system-wide change.
Specific examples fragged by Somerfield were the lack of a multi-year, well-funded scheme for decarbonising heat in commercial buildings in the Heat and Buildings Strategy; and the lack of a dedicated flexibility strategy. On the former, the Department for BEIS did, this week, propose a one-year extension to the Non-Domestic Renewable Heat Incentive (RHI).
Elsewhere, Re_Set and Springwise’s director of sustainability and innovation Rick Benfield said financial players would likely need more support to “play an active role”, moving beyond just a climate risk mitigation approach.
Benfield explained: “We increasingly see a lot of net-zero pledges, from organisations including pension funds and banks. It is great that the world of private equity is finally waking up to the threats of climate change – better late than never.
“But, in most cases, I see a lot of focus on mitigation, or traffic-light-style scorecards and assessments across ESG factors….but it’s still fairly passive, in my opinion.”
“A more proactive approach is desperately needed. We saw, at COP26, that a lot of the solutions we need are already there, but they need support to scale up.”
As an example, it was announced at COP26 that the Glasgow Financial Alliance for Net-Zero (GFANZ), which launched in April in a drive to unite the global financial sector in transitioning to net-zero portfolios by 2050, now represents more than $130trn in assets under management.
The Alliance now accounts for 40% of the world’s total financial assets, up from $90trn at the start of October However, the announcement quickly came under scrutiny, with green groups saying it may not be the boon for sustainable finance it is made out to be. The argument is that only a fraction of GFANZ’s collective assets are being aligned with a net-zero by 2050 roadmap, and that this roadmap came from the Alliance itself.
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